Your task is to write a report addressed to the Board of Directors of Schmeckt Gut in which you address the following
Your task is to write a report addressed to the Board of Directors of Schmeckt Gut in which you address the following:
- Do you think you can match the different projections? That is, do you think that a 5% increase in income is associated with a 10% tariff rate and a 2% inflation rate? Explain by linking your discussion to the following concepts:
o supply and demand
o aggregated demand and aggregated supply
o the Philipps Curve, and
o the Laffer curve.
- What impact would the different predictions of income development, inflation rate development and tariff rate development have on the potential demand of Schmeckt Gut? Conduct a multiple regression analysis using data in the supplied Excel file and then interpret the results. Fully discuss and explain their implications.
- Make recommendations as to what the Board of Directors should do under each of your scenarios, based on your matching of the predictions.
The precise format of the report will be informed by research undertaken by the student using the Torrens University library. Formal document sections such as executive summary, table of contents and appendices are not counted in the word count. Assume that the prescribed word limit is literally a limit and that the board will reject any report that breaches it.
Hint
Economics The report focuses on several macroeconomic variables of a country and their effect on business. Schmeckt Gut is a company, which wants to launch a Schmeckt Besser energy bar in Atolia of California. Opening a new business or expansion of a new business depends on economic condition of a country. Several economic factors affecting the business of Schmeckt Gut are supply and demand o...
The report focuses on several macroeconomic variables of a country and their effect on business. Schmeckt Gut is a company, which wants to launch a Schmeckt Besser energy bar in Atolia of California. Opening a new business or expansion of a new business depends on economic condition of a country. Several economic factors affecting the business of Schmeckt Gut are supply and demand of energy bar in Atolia, aggregate demand and supply in the economy, price level etc. Furthermore, the opening business in oversee is affected by economic environment of the country. International trade, business cycle, infrastructure of the economy affect the business performance of a company. Investment in the economy depends on country’s interest rate. When interest rate rises, investment in the economy is discouraged. Therefore, it hampers the progress of the economy. However, higher interest rate attracts foreign investment in domestic assets.
The prices of the product increases due to increase in interest rate or labour cost, the demand for normal goods fall. As a start up company, keeping higher price of the product may not be profitable. Success of a business depends on the economic condition of the target country. Therefore, assessment of target market is important before launching the product. The report highlights the relation among different variables such as average income of people of Atolia, inflation rate, and tariff rate. Discussion of Philips curve and laffer curve are considered here. Philip curve shows relation between country’s inflation and unemployment. Demand for product is related to unemployment rate. As unemployment rate decreases, per capita income increases. Therefore individual demand and aggregate demand increases. Hence, if there is growing aggregate demand, then the business has a good prospect in the target market. Laffer curve shows a relation between rate of taxation in the economy and other related activities within economy. Analysis of Laffer curve can suggest possible action that Schmeckt Gut can take in new business development.
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